Australian Broker Call
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September 12, 2022
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| PDL - | Pendal Group | Downgrade to Accumulate from Buy | Ord Minnett |
CCX CITY CHIC COLLECTIVE LIMITED
Apparel & Footwear
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Overnight Price: $1.66
Citi rates CCX as Neutral (3) -
Total website visits for City Chic Collective increased by 7% on average in August compared to a fall of -12% in July. Increased visitation was driven by stronger US website visits across City Chic US (up 52%) and Avenue (up 7%), and a 16% increase for City Chic Australia.
Citi also points out the magnitude of decline for Evans and Navabi was less in August compared to July.
The Neutral rating and $2.09 target price are maintained.
Target price is $2.09 Current Price is $1.66 Difference: $0.43
If CCX meets the Citi target it will return approximately 26% (excluding dividends, fees and charges).
Current consensus price target is $2.52, suggesting upside of 45.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 2.00 cents and EPS of 11.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 12.5, implying annual growth of 29.8%. Current consensus DPS estimate is 2.2, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 13.8. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 6.00 cents and EPS of 13.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 14.2, implying annual growth of 13.6%. Current consensus DPS estimate is 5.0, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 12.2. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.09
UBS rates DEG as Buy (1) -
Following the release of a pre-feasabilty study (PFS), UBS believes the Hemi deposit could be on track to be one of the largest gold deposits in Australia.
The PFS beat expectations and the analyst models a 19.5 year mine life versus the 13.6 years in the PFS to allow for project upside from extended known resources being included in the mine plan.
The longer life also anticipates new discoveries and ongoing project optimisation, explains the broker. The target price rises to $1.15 from $1.10. Buy retained.
Target price is $1.15 Current Price is $1.09 Difference: $0.06
If DEG meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY22:
UBS forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.00 cents. |
Forecast for FY23:
UBS forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 2.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
DMP DOMINO'S PIZZA ENTERPRISES LIMITED
Food, Beverages & Tobacco
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Overnight Price: $60.82
Citi rates DMP as Buy (1) -
Citi's data analysis suggests an acceleration of sales growth for Domino's Pizza Enterprises in Japan, though website traffic in Europe and Australia remains weak.
The broker remains positive on the medium-term outlook and maintains its Buy rating as inflationary headwinds look to be easing and same store sales figure are on-track to turn positive. The $84.40 target price is unchanged.
Target price is $84.40 Current Price is $60.82 Difference: $23.58
If DMP meets the Citi target it will return approximately 39% (excluding dividends, fees and charges).
Current consensus price target is $84.32, suggesting upside of 32.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 154.60 cents and EPS of 193.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 212.1, implying annual growth of 15.7%. Current consensus DPS estimate is 172.5, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 29.9. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 180.00 cents and EPS of 225.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 251.4, implying annual growth of 18.5%. Current consensus DPS estimate is 205.2, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 25.3. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $23.75
Morgan Stanley rates LOV as Overweight (1) -
Lovisa Holdings is one of the stocks where Morgan Stanley came away more bullish than consensus following the August reporting season.
The broker raises its target price to $27.25 from $18.00 and retains its Overweight rating. Industry View: In-Line.
The analyst suggests earnings (EBIT) margin expansion of 190bps is not currently allowed for in the current share price, and is supported by price increases and opex leverage. Currency and inflation headwinds are thought to provide an offset.
Morgan Stanley feels its own forecast for 85-135 new stores per annum is conservative as supply chain bottlenecks are easing and support infrastructure is scaling.
Target price is $27.25 Current Price is $23.75 Difference: $3.5
If LOV meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $24.69, suggesting upside of 1.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 EPS of 68.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.2, implying annual growth of 25.5%. Current consensus DPS estimate is 58.9, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 35.8. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 EPS of 84.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 81.8, implying annual growth of 19.9%. Current consensus DPS estimate is 68.6, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 29.8. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $71.51
Morgan Stanley rates MIN as Overweight (1) -
In reaction to media reports suggesting Mineral Resources is contemplating listing its lithium business separately in the US, Morgan Stanley points out the implications for the iron ore division.
While such a listing would be value accretive, suggests the broker, capex in iron ore may be delayed given it needs to be funded via cash flows from lithium.
The company will not confirm/deny the media speculation as any potential strategic initiatives are not sufficiently advanced or certain.
The Overweight rating and $64.80 target are unchanged. Industry view: Attractive.
Target price is $64.80 Current Price is $71.51 Difference: minus $6.71 (current price is over target).
If MIN meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $79.76, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 747.20 cents and EPS of 1494.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1031.8, implying annual growth of 458.1%. Current consensus DPS estimate is 545.6, implying a prospective dividend yield of 7.4%. Current consensus EPS estimate suggests the PER is 7.1. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 272.00 cents and EPS of 545.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1070.7, implying annual growth of 3.8%. Current consensus DPS estimate is 471.3, implying a prospective dividend yield of 6.4%. Current consensus EPS estimate suggests the PER is 6.8. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PDL PENDAL GROUP LIMITED
Wealth Management & Investments
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Overnight Price: $5.17
Ord Minnett rates PDL as Downgrade to Accumulate from Buy (2) -
Ord Minnett reviews Pendal Group's valuation following the Perpetual (PPT) takeover offer.
The broker says the offer implies proceeds of $5.44, although that is something of a moot point for many shareholders given there is no shareholder vote.
Rating downgrade to Accumulate from Buy on valuation. Target price rises to $5.35 from $4.20 to reflect the likely completion offer - about 5.2% below the Perpetual offer.
Target price is $5.35 Current Price is $5.17 Difference: $0.18
If PDL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $4.86, suggesting downside of -6.7% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 50.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 47.7, implying annual growth of -8.2%. Current consensus DPS estimate is 45.2, implying a prospective dividend yield of 8.7%. Current consensus EPS estimate suggests the PER is 10.9. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 37.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.3, implying annual growth of -23.9%. Current consensus DPS estimate is 34.0, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 14.4. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.47
Morgan Stanley - Cessation of coverage
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.98
Morgan Stanley rates VCX as Underweight (5) -
While Morgan Stanley expects FY23 will be a return to normalised retail, some degree of rent risk remains for Vicinity Centres. Around 70% of the company's malls have more than 30% of specialty leases expiring in the period.
The analyst stresses the lease expiries by themselves are not a negative, but highlight a point of difference from commonly held beliefs regarding a standard expiry profile.
Leases typically span five years, meaning 20% of income is up for renewal every year.
The Underweight rating and $1.90 target are unchanged. Industry view: In Line.
Target price is $1.90 Current Price is $1.98 Difference: minus $0.08 (current price is over target).
If VCX meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.96, suggesting downside of -1.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 11.20 cents and EPS of 14.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.5, implying annual growth of -49.4%. Current consensus DPS estimate is 10.7, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 14.7. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 11.50 cents and EPS of 14.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.9, implying annual growth of 3.0%. Current consensus DPS estimate is 11.1, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $60.46
Ord Minnett rates WTC as Accumulate (2) -
Ord Minnett reports July container trade statistics (CTS) data reveals price growth and volumes are slowing, and are turning negative across various regions.
All up, the year-on-year increase is 51% (compared with the July increase of 1.3%) and the volume slumps was most notable in North America, Middle East, Africa and the Indian subcontinent.
WiseTech's own CargoWise One platform statistics, show a retreat in the last six months but overall, the broker expects supply chain disruptions continue to support adoption of the platform.
Accumulate rating and $64 target price retained.
Target price is $64.00 Current Price is $60.46 Difference: $3.54
If WTC meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $58.43, suggesting downside of -3.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 14.00 cents and EPS of 69.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 76.2, implying annual growth of 27.7%. Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 0.2%. Current consensus EPS estimate suggests the PER is 79.2. |
Forecast for FY24:
Ord Minnett forecasts a full year FY24 dividend of 18.00 cents and EPS of 90.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 98.4, implying annual growth of 29.1%. Current consensus DPS estimate is 18.7, implying a prospective dividend yield of 0.3%. Current consensus EPS estimate suggests the PER is 61.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| DEG | De Grey Mining | $1.15 | UBS | 1.15 | 1.10 | 4.55% |
| LOV | Lovisa Holdings | $24.40 | Morgan Stanley | 27.25 | 18.00 | 51.39% |
| PDL | Pendal Group | $5.21 | Ord Minnett | 5.35 | 4.20 | 27.38% |
| PRT | PRT Co | $0.47 | Morgan Stanley | N/A | 0.09 | -100.00% |
| VCX | Vicinity Centres | $1.98 | Morgan Stanley | 1.90 | 1.80 | 5.56% |
Summaries
| CCX | City Chic Collective | Neutral - Citi | Overnight Price $1.66 |
| DEG | De Grey Mining | Buy - UBS | Overnight Price $1.09 |
| DMP | Domino's Pizza Enterprises | Buy - Citi | Overnight Price $60.82 |
| LOV | Lovisa Holdings | Overweight - Morgan Stanley | Overnight Price $23.75 |
| MIN | Mineral Resources | Overweight - Morgan Stanley | Overnight Price $71.51 |
| PDL | Pendal Group | Downgrade to Accumulate from Buy - Ord Minnett | Overnight Price $5.17 |
| PRT | PRT Co | Cessation of coverage - Morgan Stanley | Overnight Price $0.47 |
| VCX | Vicinity Centres | Underweight - Morgan Stanley | Overnight Price $1.98 |
| WTC | WiseTech Global | Accumulate - Ord Minnett | Overnight Price $60.46 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 4 |
| 2. Accumulate | 2 |
| 3. Hold | 1 |
| 5. Sell | 1 |
Monday 12 September 2022
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